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Stripe increases price for business in the European Economic Area

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Re: Stripe increases price for business in the European Economic Area

#101

Post by throwaway67743 »

thiscatis wrote: post #41
petesergeant wrote: post #31

> premium cards [are] commercial, corporate, or business cards issued by Visa and Mastercard [and attract more expensive fees, even compared to Amex] Does anyone know more about that? Why are they more expensive? Is there a different underlying cost structure, or simply price discrimination by some intermediary? There's more information on "premium cards" here[0], but it doesn't explain the price difference or why a…

Because they give more benefits (insurance, lounge access, cashback etc...) and someone has to pay for this (i.e. the merchants). For example R̶e̶v̶o̶l̶u̶t̶ ̶M̶e̶t̶a̶l̶ premium cards and corporate cards which offers benefits such as lounge access to pay-to-use lounges, travel insurance, cashback etc.. are mostly designed by the schemes in parternship with the issuing banks. Also note that mostly in the US and Europe…

re Open Banking, it's still a system where everyone but the actual customer gets useful access to financial services (ie; I can't get an API from a bank as the account holder, but I can give API access to a third party) - unfortunately that isn't mandated as part of the system and for me makes it completely useless.

Re: Stripe increases price for business in the European Economic Area

#102

Post by dahfizz »

Timshel wrote: post #79
bjackman wrote: post #10

I have been pondering transaction costs lately. Seems like this is an area where intervention could have massive impact: these costs are effectively a tax that incurs deadweight loss so according to prevailing economic theory if we can reduce it the whole economy should be catalysed. IIUC governments already introduce price caps for certain elements of this market but I think we could be doing more? Like mandating in…

I wish those transaction cost would be made visible. Imo the seller should not care which card the client use, if it's more expensive to use a "premium" card then it should be made visible to the client and he should be the one to pay the overhead.

I don't see transaction fees as fundamentally different than any other cost to the business. Do consumers also need to know how much the business pays in electricity, or the rent the business pays?

Re: Stripe increases price for business in the European Economic Area

#103

Post by hocuspocus »

throwaway67743 wrote: post #100
hocuspocus wrote: post #58

Earlier quoted context omitted.

It doesn't apply to the card scheme, it applies to interchange, i.e. the part that goes back to the card issuer. I don't see how that is dumb, the EU cannot do anything about issuers outside of it, and PSPs have to reflect the huge difference in interchange fees one way or another.

Correct, merchants do not charge interchange, banks/networks do, and its dumb because it increases the costs of doing business in the EU (which as I said, makes it more insular)

How does lowering fees increase the cost of doing business exactly?

The only businesses suffering from the cap are issuing banks.

Re: Stripe increases price for business in the European Economic Area

#104

Post by concerned_user »

doikor wrote: post #96
IshKebab wrote: post #83

Earlier quoted context omitted.

Yes this is all that needs to happen. The EU should mandate that sellers can pass transaction costs on to consumers if they want (but no more than transaction costs, looking at you airlines).

> EU should mandate that sellers can pass transaction costs on to consumers EU actually mandates the opposite. It is illegal to pass the transaction costs to the consumer. The price you see on an item has the be the final price you end up paying.

In many online shops in EU you can see "Administrative fee" if your order is too small for example. So while companies are not allowed to do "Credit card fee" they still do it indirectly in one way or another, those that don't impose extra fee usually have higher delivery fee.

Re: Stripe increases price for business in the European Economic Area

#105

Post by runnerup »

dahfizz wrote: post #93
abm53 wrote: post #35

Earlier quoted context omitted.

On the other hand, transaction networks clearly add massive value, so it’s very likely that net of fees (without which the network may not exist at all) these networks still add value. So it’s more a question of finding the optimal equilibrium rather than viewing fees as “deadweight”.

"Dead weight loss" is an economic term. It sounds like a generic English phrase but it has a very specific meaning and formula. [1] if you are interested. Particularly the section on the dead weight loss of taxes - in this case, transaction fees operate the same as taxes. https://en.m.wikipedia.org/wiki/Deadweight_loss

> transaction fees operate the same as taxes.

Absolutely. And for the colloquial English phrase "dead weight" that would correspond to the portion of these fees which go above and beyond the cost of running the (high-utility) transaction network. Reducing the rent-seeking on this network also reduces both the colloquial and technical meanings of "deadweight".

But for the economic term "deadweight", additional deadweight loss can be reduced by anyone who can provide similar functionality to the current interchange network but at lower cost than the current network. This wouldn't reduce the colloquial "deadweight" because in theory 100% of the fees could already be going towards necessarily funding the existing network. But it would still reduce the economic deadweight of 1-4% tax on every transaction.

Re: Stripe increases price for business in the European Economic Area

#106

Post by chinathrow »

reisse wrote: post #15

I don't know how Stripe can justify these pricing, except for "oh we can extract more money, let's do that!". In other (non-Western) countries pricing for local payment systems can be less than half of what Stripe charges, e. g. Alipay (one of the biggest Chinese payment services) charges about 0.55% merchant fee without per-transaction cost.

I got hit by the same price increase today - I assume they're prepping up for the IPO.

Re: Stripe increases price for business in the European Economic Area

#107

Post by adrr »

avianlyric wrote: post #78
bjackman wrote: post #10

I have been pondering transaction costs lately. Seems like this is an area where intervention could have massive impact: these costs are effectively a tax that incurs deadweight loss so according to prevailing economic theory if we can reduce it the whole economy should be catalysed. IIUC governments already introduce price caps for certain elements of this market but I think we could be doing more? Like mandating in…

The EU introduced price caps on interchange in 2015 capping interchange on credit cards at 0.3% and debit cards at 0.2%. That’s almost an order-of-magnitude lower than interchange fees in the US, which are usually around the 1%-2% level. This is big part of the reason you don’t see high value reward cards or cashback program in the EU. There simply isn’t the interchange revenue to fund them, which is good thing, beca…

How do credit cards provide 60 day interest free loan with only 0.3% charge to the merchants? I can see low interchange rates for debit cards like the US the interchange for debit card for major banks is capped at 0.05%.

Re: Stripe increases price for business in the European Economic Area

#108

Post by throwaway67743 »

hocuspocus wrote: post #103
throwaway67743 wrote: post #100

Earlier quoted context omitted.

Correct, merchants do not charge interchange, banks/networks do, and its dumb because it increases the costs of doing business in the EU (which as I said, makes it more insular)

How does lowering fees increase the cost of doing business exactly? The only businesses suffering from the cap are issuing banks.

Fees are not the only cost of business, compliance is too - and things like if you want to enjoy lower intra-EU costs then you need to be in the EU which is an added cost as a non-EU business, etc - it's not as simple as "fees more eu bad"

Re: Stripe increases price for business in the European Economic Area

#109

Post by chinathrow »

sensibar wrote: post #61

So what to do as a German company to avoid the 1% fee on payouts to US USD bank accounts? Does anyone know if one can add a German USD-bank account to Stripe by now? (Was not possible a year ago) Does the 1% fee also apply if the company is based in Switzerland? (strictly not the EEA) Does anyone at which MRR scale one can negotiate fees down with Stripe?

> Does the 1% fee also apply if the company is based in Switzerland?

Yes.

Re: Stripe increases price for business in the European Economic Area

#110

Post by khuey »

avianlyric wrote: post #78
bjackman wrote: post #10

I have been pondering transaction costs lately. Seems like this is an area where intervention could have massive impact: these costs are effectively a tax that incurs deadweight loss so according to prevailing economic theory if we can reduce it the whole economy should be catalysed. IIUC governments already introduce price caps for certain elements of this market but I think we could be doing more? Like mandating in…

The EU introduced price caps on interchange in 2015 capping interchange on credit cards at 0.3% and debit cards at 0.2%. That’s almost an order-of-magnitude lower than interchange fees in the US, which are usually around the 1%-2% level. This is big part of the reason you don’t see high value reward cards or cashback program in the EU. There simply isn’t the interchange revenue to fund them, which is good thing, beca…

Debit card fees in the US have been capped at $0.22 + 0.05% for more than a decade.
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